The owner of the Rugby Park Food Centre has been fined for selling legal highs without a licence.

Murray Allan Baird, 64, appeared before Judge Phil Moran in the Invercargill District Court today and admitted possessing a firearm without a licence and selling an approved product without a licence under the Psychoactive Substances Act 2013. He was fined $800.

Police prosecutor Sergeant Denise Harvey said police carried out a search warrant in October at the Rugby Park Food Centre, which Baird owns, where they found legal highs and a shotgun. The raid came after an 18-year-old filmed Baird selling him legal highs and gave the footage to police.

The Psychoactive Substances Act, introduced in mid-July, prohibits the sale of legal highs from dairies. People are required to get a licence to sell psychoactive substances.

Mrs Harvey said leading up to the introduction of the Act Invercargill Police visited affected retail outlets to explain it to them. Baird was visited on June 27. He was told the Act would prevent him from selling legal highs from his dairy and the Crinan St Dairy, which he also owned.

Police also commenced an education phase after the Act was introduced and visited retail outlets again, she said.

Shop owners were informed they could either return stock to their suppliers or surrender it to police for destruction or safekeeping without being prosecuted, she said.

On July 18 Baird surrendered 90 legal high products to police for safekeeping until he obtained a licence to sell, Ms Harvey said.

In October Baird contacted a legal high distributor in Auckland and placed an order for 500 legal highs.

On October 15 an 18-year-old attempted to buy legal highs from Baird.

Baird reached under his counter and produced a bundle of legal high products. The 18-year-old paid $20 cash for one packet, labelled Lemon Grass, and left. But the teen had filmed the transaction on an Ipod concealed in his shirt and gave the footage to police, Ms Harvey said.

In the next few days Baird ordered a further 600 legal high products.

Police carried out a search warrant on October 23 and found legal high products. During the search police found invoices showing he had purchased 1100 packets of legal high products between October 1 and 15, 2013, Ms Harvey said.

An unloaded single barrel pump-action remington shotgun was found in a corner of a small curtained off area between the shop front and storage area. He did not have a firearms licence.

Baird told police he slept in the area where the shotgun was found and kept it there for self-defence in case his shop was robbed, she said.

He declined to comment about the legal highs.

Baird's lawyer Fergus More said his client had found an alternative address, in Crinan St, and had applied for an interim licence. It was not a dairy and not prohibited under the act.

He continued to purchase the legal highs. The 18-year-old came in and purchased one legal high resulting in the police raid, which found 1100 legal highs had been purchased. 862 were recovered, he said.

The Ministry of Health was not satisfied with the Crinan St address, adjacent to his store, and he had since abandoned the application to continue his licence, he said.

Judge Moran said he should not have had the shotgun without a licence.

He was silly to give in to an opportunity to sell a legal high on an occasion he knew he shouldn't have, he said.